The world’s most successful investor, Warren Buffet, has opened up about his investment strategies to money website Benzinga.

The 84 year-old CEO of Berkshire Hathaway is currently worth a cool $A 90 billion, so people pay attention when he speaks. In fact, many stock investors just follow Buffett’s lead – buying what he buys, selling when he sells.

But when asked about investing secrets Buffett was far more parochial, “Just do it,” he said. “Pay no attention to the headlines in the paper or people on television. Just put aside a little money every month – put it in a very low-cost index fund.

“If you do that throughout your working career you’re bound to have substantial capital in the end. Don’t try to time it, don’t try to pick individual stocks, just put X dollars per month away and you’ll live a very comfortable life.”

Buffett likened the changing moods of the stock market to those of a “drunken psycho”.

“Some days he gets very enthused and some days he gets very depressed. And when he gets really enthused, if you happen to be trading stocks, you sell to him. And if he gets very depressed, you buy from him.

“There’s no moral taint attached to that. When people get scared other people get scared, and when they get exhilarated other people get exhilarated.

“Emotions are contagious, and emotions have no business in investing.”

 

What Warren Buffet neglected to mention is that Berkshire Hathaway is one of a handful of automated traders. Together with three or four others they make upwards of 70 per cent of all online stockmarket trades.

What sets automated trading apart from the normal Mum and Dad investors is that they have sophisticated computer software able to source, read, and evaluate almost every printed article on the web each day. When the software recognises positive remarks surrounding a stock it issues an order to buy. When it recognises negative press it issues an order to sell. These trades take place in a fraction of a second, millions of times a day.

But he left that part out.

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